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In private law, children, and financial remedy proceedings, there is a requirement for an application to initiate proceedings to be accompanied by a form containing either confirmation from an authorised mediator that the prospective applicant has attended a Mediation Information Assessment Meeting (MIAM) or, a claim by the prospective applicant that one of the MIAM exemptions applies.

What is a MIAM?

A MIAM is a first meeting with a specially trained mediator to consider whether your issues can be resolved without going to court.  This is an individual meeting and a confidential meeting to give you an opportunity to talk about your situation and the issues that need to be addressed. The mediator will provide you with information about the non-court dispute resolution options, including mediation and discuss with you their advantages and disadvantages.

Circumstances in which the MIAM requirement does not apply:

If you want to issue an application at court it is a requirement in most cases to first attend a Mediation Information Assessment Meeting and attach to your application confirmation from the mediator of attendance at the MIAM. This does not however apply in every case.  The circumstances where a MIAM requirement does not apply are as follows:

• Evidence of domestic abuse
  The Domestic Abuse Act 2021 defines ‘abusive behaviour’ as any of the following: 
  • Physical or sexual abuse
  • Violent of threatening behaviour
  • Controlling or coercive behaviour
  • Economic abuse
  • Psychological, emotional or other abuse

• Child protection concerns

• Urgency
  • There is risk to the life, liberty or physical safety of the prospective applicant or his or her family or his or her home; or
  • any delay caused by attending a MIAM would cause:
    • a risk of harm to a child;
    • a risk of unlawful removal of a child from the UK, or risk of unlawful retention of a child who is currently outside England and Wales;
    • a significant risk of miscarriage of justice;
    • significant financial hardship to the prospective applicant; or
    • irretrievable problems in dealing with the dispute (including the irretrievable loss of significant evidence); or
    • there is a significant risk that in the period necessary to schedule and attend a MIAM, proceedings relating to the dispute will be brought in another state in which a valid claim to jurisdiction may exist, such that a court in that other state would be seised of the dispute before a court in England and Wales.

• Previous MIAM attendance or non-court resolution attendance
  • In the 4 months prior to making the application, the person attended a MIAM or non-court dispute resolution process relating to the same or substantially the same dispute and where the person attended a non-court dispute resolution process there is evidence of that attendance.
  • The application would be made in existing proceedings which are continuing, and the prospective applicant attended a MIAM before initiating those proceedings.

• Other
  • Prospective applicant is bankrupt;
  • The application would be made without notice (paragraph 5.1 of Practice Direction 18A sets out the circumstances in which applications may be made without notice);
  • The prospective applicant is subject to a disability or other inability that would prevent attendance in person at a MIAM unless appropriate facilities can be offered by an authorised mediator. This provision extends to proving incapacity to attend online or by video link first.  They would then have to contact as many authorised family mediators as have an office within fifteen miles of their home (or five or them if there are five or more) and all have stated that they are unable to provide such facilities;  
  • The prospective applicant is in prison or other institution and facilities cannot be made available for them to attend a MIAM online or by video-link or subject to bail or licence conditions preventing contact with the other person;
  • A child is one of the prospective parties;
  • Lack of availability of a local mediator if online is not possible; and
  • Non-existence of any local mediator if online is not possible.

What happens at a MIAM?

Only an authorised family mediator can conduct a MIAM.

At the MIAM the authorised mediator must:

• Provide information about the principles, process and different models of mediation, and information about other methods of non-court dispute resolution;

• Consider an explain the potential benefits of mediation and other methods of non-court dispute resolution as a means of resolving the dispute;

• Assess whether there has been, or is a risk of domestic abuse;

• Assess whether there has been, or is a risk of, harm by a prospective party to a child that would be subject of the application; and

• Indicate to those attending the MIAM which form, or forms of non-court dispute resolution may be most suitable as a means of resolving the dispute and why and provide information about how to proceed with the form, or forms of non-court dispute resolution in question.

Our approach to non-court dispute resolution

At Watson Morris we will gain an understanding of your circumstances and how your family communicate with one another, both before and after your separation.  We will also carefully assess with you the appropriateness and suitability of using different non-court dispute resolution options. If you need to attend a MIAM we will guide your through the process and refer you to an authorised meditator.  

For an overview of all the non-court dispute resolution options we can support you with, visit  Dispute Resolution – Watson Morris Family Law or you can download our guide to dispute resolution.

For an initial fee no obligation discussion to see how we can help please contact us.

Recent changes to the Family Procedure Rules mean families and the court must do more than simply consider non-court dispute resolution.

Changes to the Family Procedure Rules

Amendments to the Family Procedure Rules came into force on 29 April 2024 and make provision for the court to encourage parties to resolve their disputes out of court.  

The new rules require parties to file a form with the court setting out their views on using non-court dispute resolution and make provision for the court to use timetabling to encourage non-court dispute resolution. When deciding what cost orders to make in financial remedy proceedings the new rules expressly provide for the court to have regard to any failure by a party, without good reason to attend a Mediation Information Assessment Meeting (MIAM) or attend non-court dispute resolution.  

Whilst there is nothing new in offering clients alternatives to court and indeed at Watson Morris we have been using alternative dispute resolution for years, there remain many practitioners whose default has always been court.  Under the new rules they must do more than advise clients to consider non-court dispute resolution otherwise they may face criticism and adverse cost orders being made against them.

The rules also bring in a new a new definition of non-court dispute resolution which means ‘methods of resolving a dispute other than through the court process, including but not limited to mediation, arbitration, evaluation by a neutral third party (such as a private Financial Dispute Resolution process) and collaborative law’.  For a detailed explanation of all non-court dispute resolution options visit  Dispute Resolution – Watson Morris Family Law or you can download our guide to dispute resolution

Dispute resolution options

One size doesn’t fit all.  The different non-court dispute resolution options can be adapted to meet a client’s need or used alongside each other. For example, a couple can start off meeting with a mediator (which can be facilitated in the same room or in separate rooms called shuttle mediation) before moving on to use hybrid mediation which involves the parties’ lawyers in the negotiations.

Protecting parties from domestic abuse

Family practitioners must undertake careful assessments with their clients as to the appropriateness and suitability of the different options.  It is essential to gain an understanding of how the family communicate with one another, both during their relationship and post separation. Great care must also be taken in considering if there is or has been any form of abusive behaviour or power imbalance.  The new rules amend references to the term ‘domestic violence’ to align the Family Procedure Rules more closely with the terms used in the Domestic Abuse Act 2021 and which defines ‘abusive behaviour’ as any of the following:

• Physical or sexual abuse
• Violent or threatening behaviour
• Controlling or coercive behaviour
• Economic abuse
• Psychological, emotional or other abuse

Our approach at Watson Morris

At Watson Morris will carefully consider what course of action is in our client’s best interests and help our clients reach an outcome that works.  In some instances, for example if there are safeguarding or disclosure/evidence issues or the matter is urgent issuing court proceedings may be appropriate. 

For an initial fee no obligation discussion to see how we can help please contact us.

Family mediation is a process in which an independent, professionally trained mediator helps you work out arrangements for children and finances following separation.

Child-inclusive mediation provides opportunities for children and young people to have their voices heard directly during the process of mediation. This helps them to feel respected and listened to and, at their request, to assist parents or carers to receive, understand and take account of the child’s messages and/or suggestions regarding decisions and arrangements for them.

The purpose of child-inclusive mediation is to give children a ‘voice’ rather than a ‘choice’.  The decision making process will always remain with the adults.

Child inclusive mediation: Why is the voice of a child important in mediation?

In March 2022 the Healthy Relationship Education and Healthy Relationship Transitions Project[1] led by Professor Anne Barlow at the University of Exeter was published (the HREHRT project).  The research confirms that one of the barriers to a greater uptake of child-inclusive mediation is due to parental reluctance to engage in the process because of a wish to shield children from what is viewed as the adult dispute. Contrary to this view, the research shows that children want their voice to be heard.  Previous research has also shown, and that child-inclusive mediation ameliorates the adverse effects of parental separation on children by reducing parental conflict (McIntosh et al., 2008; Fortin et al., 2012).

The HREHRT project explored young people’s experiences of child-inclusive mediation and found:

• Children wanted a voice in the decision-making process about arrangements when parents separate.
• Young people and professionals strongly supported the inclusion of children’s rights when parents separate within the relationship education curriculum, given the large numbers affected.
• Young people feel they are more resilient than adults give them credit for in handling issues.
• Having your voice heard as a young person in a parental mediation is empowering and cathartic, bringing mental health and well-being benefits.
• Speaking to an empathetic third party was an opportunity to discuss things they felt unable to raise with their parents, reducing anxiety.
• Inclusion in mediation signalled parents cared about their opinion, helped them understand options and improved children’s communication with parents.

[1] For a copy of the report use the following link ResearchGate. 

The right of a child to have their views expressed

Article 12 of the United Nations Convention on the Right of the child establishes the right of every child to freely express her or his views, in all matters affecting her or him, and the subsequent right for those views to be given due weight in accordance with the child’s age and maturity.

Article 12.1

Parties shall assure to the child who is capable of forming his or her own views the right to express those views freely in all matters affecting the child, the views of the child being given due weight in accordance with the age and maturity of the child.

Article 12.2

For this purpose, the child shall in particular be provided the opportunity to be heard in any judicial and administrative proceedings affecting the child, either directly, or through a representative or an appropriate body, in a manner consistent with the procedural rules of national law.

Is there an age limit for child-inclusive mediation?

Child-inclusive mediation is available for young people aged 10 and over.

How does child-inclusive mediation work and what is the process?

Once a referral has been made to a mediation service you will be invited to a Mediation Information Assessment Meeting (MIAM).  At this meeting the mediator will assess if there are any safeguarding issues, your child’s capacity and ability of the parents to take on board the child or young person’s feedback.  At this meeting information will also be given about consent, the role of the mediator, confidentiality, and boundaries of the process.

Your mediator will talk to you about how your children can contribute, and if you both agree, the mediator will arrange to meet with your children. These meetings will usually take place in a neutral place such as the office or in school.

The mediator must remain impartial in a meeting with a child or young person and must remain neutral as to the outcome of mediation.  The mediator does not represent the child or act as the child’s advocate. 

The meeting with the children is confidential and they decide how their views and opinions are relayed back to you. Mediators only report back what the child or young person has asked the mediator specifically to convey.

How do I find a mediation service who offer child-inclusive mediation?

The Family Mediation Council (FMC) is a not for profit organisation that maintains a professional register of family mediators.  It doesn’t provide mediation itself or recommend a particular provider.  Below are details of the mediation organisations who are members of FMC and links to their websites and links to find your nearest mediator.

Resolution

Resolution – Mediation (resolution.org.uk)

To find a mediator: Resolution – Find a mediator

National Family Mediation

Child Inclusive Mediation | National Family Mediation (nfm.org.uk)

To find a mediator: National Family Mediation – Find a mediator

College of Mediators

College of Mediators – Mediation (collegeofmediators.co.uk)

To find a mediator: College of Mediators – Find a mediator

Family Mediators Association

Family Mediators Association – What is mediation (thefma.co.uk)

To find a mediator: Family Mediators Association – Find a mediator

Conclusion on child-inclusive mediation

Research has shown that children want a voice when it comes to the arrangements to be made for them on separation and that having their voice heard in child-inclusive mediation is empowering and brings mental health and well-being benefits.  Furthermore, it also enables parents to better co-parent through their separation and reduces conflict.

The team at Watson Morris can support you with mediation and child-inclusive mediation. For an initial free no obligation discussion to see how we can help please contact us.

Questions always arise when it comes to unmarried couples and property rights. In this insight we’re focusing on who gets to occupy the family home on separation.

Unmarried couples and property rights: Who gets to occupy the family home if it is jointly owned?

If property is jointly owned both parties will be entitled to occupy the property unless their occupation has been prohibited, suspended or restricted. This could be by an occupation order under Part IV of the Family Law Act 1996 (FLA 1996) or by the court’s powers under section 13 of the Trusts of Land and Appointment of Trustees Act 1996 (TLATA 1996).

Occupation order under the FLA 1996

An occupation order is an order conferring, declaring, restricting, or regulating rights of occupation in the family home between parties who are in, or who have been in certain categories of relationship including an unmarried couple.

An application may be made under FLA 1996 section 33 by an applicant who has an estate, interest, or home rights in the property. To apply the applicant must satisfy three conditions; namely that the applicant is entitled to occupy a property termed ‘a dwelling-house’, the respondent is ‘associated’ and the property must be, have been, or have been intended to be the home of the applicant and respondent.

In deciding whether to make an occupation order, the court will consider all the circumstances of the case, including:

• the housing needs and housing resources of the parties and any relevant child;
• the financial resources of the parties;
• the likely effect of any order or any decision by the court not to exercise its powers on the health, safety or wellbeing of the parties and any relevant child; and
• the conduct of the parties to each other.

Occupation order under section 13 of TLATA 1996

If joint owners cannot agree who will occupy the family home or their shares in the property an application can be made under section 14 of TLATA 1996.  Under section 14 the court can declare the nature and extent of a person’s interest in property as well as make an order for sale. 

Under section 13 of TLATA 1996  the court can give directions as to the right to occupy the property. The matters to which the court are to have regard when exercising powers under section 13(4):

• the intentions of the person or persons (if any) who created the trust;
• the purpose for which the land is held; and
• the circumstances and wishes of each of the beneficiaries who is (or apart from any previous exercise by the trustees of those powers would be) entitled to occupy the land.

Under section 13(5) conditions may be imposed such as requiring one party to pay outgoings or expenses in relation to the property or to assume any other obligation in relation to the land or to any activity which is or proposed to be conducted there. 

Under section 13(6) where one party’s entitlement to occupy has been excluded or restricted conditions which may be imposed on the other party may include orders requiring them to make payments by way of compensation or to forego any payment or other benefit to which they would otherwise be entitled.

Unmarried couples and property rights: Who gets to occupy the family home if it is owned by one person.

If an unmarried couple separate and the property is solely owned by one cohabitant, the non-owning cohabitant will usually only have the status of a bare licensee. They will only be entitled to remain in the property for as long as the legal owner gives permission. All that is required is for the legal owner to give reasonable notice for the non-owning cohabitant to leave. 

Once the notice expires the non-owning cohabitant will become a trespasser.   

However, if you are unmarried and do not own the house you live in, there are options to gain the right to occupy the home should your relationship break down.

Rights to occupy the family home if  ex-partner is the sole owner

A non-owing cohabitant may have a right to occupy the family home if they can show that they have a beneficial interest, rights by proprietary estoppel, a contractual or irrevocable licence or apply for an occupation order under the FLA 1996.  

Establishing beneficial interest in the family home

A beneficial interest in a property is the right to live in the property or receive the profits or income from it. A cohabitant who is not the legal owner of a property may be able to claim a beneficial interest in the family home, if they can show that there was an agreement that they should have a beneficial interest. This may be expressed or inferred from conduct. If an agreement can be shown to have been made, then absent agreement about the extent of the interest the court may under section 14 TLATA 1996 either infer the parties’ shared intentions in relation to the family home by reference to their whole course of conduct in relation to it or impute an intention that the claimant is to have a fair beneficial share in the property. 

Establishing a beneficial interest may also give the non-owning cohabitant a defence to any action taken by the legal owner to evict them. Where a cohabitant is alleging a beneficial interest in the property it is likely that any possession proceedings would be stayed pending determination of that claim, or if the possession proceedings are issued first there will be a counterclaim by the non-owning cohabitant for a declaration that they have a beneficial interest.

Establishing a beneficial interest may also give the non-owing cohabitant the right to apply for occupation orders under the FLA 1996 and section 13 TLATA 1996.

Establishing a right to occupy the family home by proprietary estoppel

Proprietary estoppel arises from the courts’ equitable jurisdiction to ‘adjust’ rights over property if the assertion of strict legal rights is found to be unconscionable.  It happens most commonly where a property owner has encouraged another to act to their detriment in the belief that they will obtain an interest in the property.  

A claimant seeking to rely on proprietary estoppel must establish:

• A representation made or assurance which encourages or allows the claimant to believe that they have or will have some right or benefit over the property;
• Reliance by the claimant on the representation or assurance;
• Some detriment incurred by the claimant as a consequence of that reliance;
• It would be unconscionable for the property owner to go back on their representation or assurance.

Detriment is not confined to pure financial detriment.  Detriment could for example be pleaded if the claimant gives up a job, their own property or rental accommodation upon reliance of the respondent’s assurance. 

If a cohabitant can establish that they have rights by estoppel, the courts may decide on the appropriate remedy, for example by granting them a licence, a tenancy or a beneficial interest in the property.

Establishing a right to occupy the family home under a contractual or irrevocable licence

A contractual or irrevocable licence may arise if the non-owning cohabitant can show that there is a form of contract or agreement between the parties. If a contractual or irrevocable licence is established, then the non-owning cohabitant can stay in the property until the event agreed upon occurs.

A licence to occupy may also arise where the legal owning cohabitant leads the non-owning cohabitant to believe that they will not enforce their right of exclusive possession and the non-owning cohabitant acts to their detriment in reliance on that belief, akin to proprietary estoppel.

Applying for an occupation order under the Family Law Act 1996

If a non-owning cohabitant cannot establish a beneficial interest in the property and their former cohabitant is entitled to occupy the property, they can apply for an occupation order under section 36 of the FLA 1996.

Unlike occupation orders under section 33 above, an order under section 36 may only be made for a period of six months, with the prospect of an extension for a further six month period but no longer (FLA 1996, s 36(10)).

When deciding whether to make an order under section 36 the court must take account of a wider range of factors to the circumstances, they are required to consider on an application under section 33 and including:

• the housing needs and housing resources of the parties and any relevant child;
• the financial resources of the parties;
• the likely effect of any order or any decision by the court not to exercise its powers on the health, safety or wellbeing of the parties and any relevant child; and
• the conduct of the parties to each other;
• the nature of the relationship and in particular the level of commitment involved in it;
• the length of time the parties have cohabited;
• whether there are or have been any children who are children of both parties or for whom the parties have or have had parental responsibility;
• the length of time that has elapsed since the parties ceased to live together; and
• the existence of any pending proceedings for an order for financial relief against parents under Schedule 1 of the Children Act 1989, or proceedings relating to the legal or beneficial ownership of the dwelling house.

Unmarried couples and property rights conclusion

Whether an unmarried couple jointly own the family home, or it is owned by only one cohabitant there are several remedies available to regulate occupation of the family home. 

This area of law is complex and therefore we recommend that if you are in a situation where you are an unmarried couple and seeking rights to a property, you book in for an initial free no obligation discussion to see how the team at Watson Morris Family Law can help.

This insight will highlight the tax implications following the breakdown of cohabitation and what unmarried couples should think about during this process.  If you are currently married and need advice on tax implications following divorce – take a look at our previous insight, Tax Implications Following Separation and Divorce.

What is capital gains tax?

Capital gains tax (CGT) is a tax on the profit when you sell or ‘dispose’ of an asset in a tax year.  It is the gain you make that is taxed, not the amount of money you receive. The definition of a disposal includes not only a sale of an asset, but also a disposal by way of gift or a transfer under a financial settlement. You only pay CGT on your overall gains above your tax-free allowance (called the Annual Exempt Amount). To find out what the annual exemption is for the current tax year visit: CGT allowances

Losses can be offset against the chargeable gain.  Losses are firstly offset against gains arising in the same tax year.  If losses exceed the gains arising in the same year, the losses are carried forward to be offset against future chargeable gains.

If you dispose of an asset you jointly own with someone else, you only pay CGT on your share of the gain.

What assets do you pay capital gains tax on?

You pay CGT on the gain when you sell or dispose of chargeable assets, examples of which include:

• Personal possessions worth £6,000 or more each, apart from your car.
• Property that is not your main home.
• Your main home if previously let, used for business purposes or if the garden and grounds exceed 0.5 of a hectare (just over an acre or 5,000 square metres) and do not meet certain tests.
• Shares not held in an ISA or PEP.
• Business assets (subject to meeting required conditions).

If you sell or give away crypto assets (like crypto currency or bitcoin), you should check if you have to pay CGT.

What assets are exempt from capital gains tax?

You do not pay CGT on gains you make from:

• Your car, including classic cars.
• Gifts to UK registered charities.
• Personal belongings or chattels where the sale proceeds are less than £6,000 each.
• ISAs or PEPs.
• UK government gilt-edged securities, for example, national saving certificates, premium bonds and loan stock issued by the Treasury.
• Betting, lottery or pools winnings.
• Personal injury compensation.
• Cash.
• Foreign currency held for your own use.

How to work out your capital gains tax

To calculate whether CGT is payable, you will need the following information:

• Acquisition cost.
• Current market value or, if a sale has taken place, the sale price/net proceeds of sale.
• If additional funds have been used to buy, sell or improve the property the following can be deducted:
  • Fees or commission for professional advice or services, e.g. CGT valuation, solicitor and estate agent fees.
  • Improvement costs increasing the value of the property, but not maintenance costs such as repairs or decorating.
  • Stamp duty and VAT.
• Capital losses on disposals in the same tax year and capital losses brought forward from previous tax years.

CGT on asset transfers

As a general rule, transactions that are not at arm’s length must be recalculated as having been at market value.  A transaction between a cohabiting couple may therefore be treated as not having been at arm’s length.

In this situation, the sale is deemed to take place at market value, regardless of the actual proceeds that are paid (if any). A chargeable disposal will arise, and CGT will be due (subject to any annual exemptions, reliefs and losses available).

CGT on overseas assets or if you are abroad

You may have to pay CGT if your asset is overseas, for example a holiday home that is not listed as part of the financial settlement. If this applies, the impact of foreign currency movements on the disposal will need to be considered.  In addition, there may be local taxation issues to consider.  In the same way as for any other chargeable asset, the acquisition cost and value on disposal of a property will be calculated by reference to Sterling at the relevant dates.  This can give rise to seemingly paradoxical results, whereby the value of a property may have decreased in local currency terms but have increased in Sterling terms (or vice versa) as a result of movements in exchange rates. 

You have to pay tax on gains you make on property and land in the UK, even if you’re non-resident for tax purposes. You do not pay CGT on other UK assets, for example shares in UK companies, unless you return to the UK within 5 years of leaving.

Principal private residence relief

Principal private residence relief (PPR) provides an exemption from CGT on an individual’s main residence (including grounds of up to half a hectare). An individual can only have one PPR at a time. 

No relief is available for any proportion of the property that is used exclusively for business purposes, including a letting business.  For example, if a garage has been converted into a therapy room, no PPR relief will be given on the proportion of the gain relating to the garage.  The split is usually calculated based on area, but any just and reasonable method of apportionment can be used. HMRC accepts that the position is different if the tenant is a lodger sharing communal spaces with the owner.

Lettings relief may be claimed if owners have occupied the property at the same time as their tenants, provided they were not carrying on a trade or business.

PPR is only available for the period in which the individual has lived in the property, no other exemptions are available for unmarried couples.

If the relevant person has moved out of the property prior to its sale or transfer and that period of absence exceeds 9 months, any gain must be time apportioned to the period of living in the property (plus a 9 month exemption) and the remaining period of ownership. The remaining period of ownership will be subject to CGT.

When is capital gains tax payable?

A 60-day reporting and payment period is required on residential property.  A standalone return will be required to be submitted to HMRC within 60 days of completion, along with a payment on account of CGT based on an estimated calculation of the gain.  Capital losses and available reliefs can be factored in. The reporting period is reduced to 30 days if you are non UK resident at the time of sale.

Using a family-owned company to fund a financial settlement

It is essential to seek advice if you are intending to dispose of shares or assets in a private limited company.  There are a number of ways the business can fund a settlement and it is essential that you get advice on the best way of extracting the funds, and the reliefs and exemptions available. 

Business Asset Disposal Relief (formerly Entrepreneurs Relief) is available to individuals who are disposing of shares or assets in a private limited trading company. The individual must own at least 5% of the overall share capital and have held the shares for at least 24 months prior to the disposal.

Stamp duty land tax (SDLT)

If joint owners are unmarried when they transfer an interest in land or property from one joint owner to another they may have to pay SDLT.

SDLT is not payable if 2 or more people jointly own property (as joint tenants or tenants in common) and they divide it physically and equally and own each part separately.

If one person takes a bigger share, or all of the other’s share, SDLT will be charged on any transfer, based on the consideration given for the transfer including:

• any cash payment;
• any assumption of a liability to pay a mortgage: the liability assumed is taken to be a proportion of the outstanding mortgage corresponding to the proportion of the share of the property that is acquired.

The additional dwellings rate will not be charged where there is a property exchange where a co-owner adds to an existing interest in their main residence.

Tax implications on cohabitation breakdown- conclusion

Tax implications on separation can be complex and costly if you do not seek professional advice. The team at Watson Morris Family Law can help you navigate the tax implications that may arise on the breakdown of your cohabitation. This insight is for general guidance only and should not regarded as legal or financial advice.

For an initial free no obligation discussion to see how we can help please contact us.

Different tax rules apply depending on whether a couple is married, separated or divorced. This insight will highlight the tax implications of separation and divorce and what you should consider during this process.  

When do you cease to be a married couple for tax purposes?

For tax purposes, a couple is treated as ceasing to be a married couple from the point of separation rather than the start of the divorce proceedings. Under legislation, separation is defined as the point at which a couple are separated under a court order or in circumstances in which the separation is likely to be permanent. 

What is capital gains tax?

Capital gains tax (CGT) is a tax on the profit when you sell or ‘dispose’ of an asset in a tax year. It is the gain you make that is taxed, not the amount of money you receive. The definition of a disposal includes not only a sale of an asset, but also a disposal by way of gift or a transfer under a divorce settlement. You only pay CGT on your overall gains above your tax-free allowance (called the Annual Exempt Amount). To find out what the annual exemption is for the current tax year, visit CGT allowances

Losses can be offset against the chargeable gain. Losses are firstly offset against gains arising in the same tax year. If losses exceed the gains arising in the same year, the losses are carried forward to be offset against future chargeable gains.

If you dispose of an asset you jointly own with someone else, you only pay CGT on your share of the gain.

Capital gains tax implications during marriage

Individuals who are married can transfer chargeable assets between themselves, without any CGT arising. The transfer takes place on a no gain/no loss basis. 

The recipient is deemed to have purchased the asset for the same price that their spouse paid for it, so no capital gain arises. 

Capital gains tax implications of separation or divorce 

When a married couple separate permanently, they are considered to be ‘connected parties’ for CGT purposes, until the date of the final divorce order. This is relevant as transfers of assets between connected parties are deemed to take place at market value, regardless of the actual proceeds that are paid (if any). A chargeable disposal will arise, and CGT will be due (subject to any annual exemptions, reliefs and losses available).

Any transfers made under a court order, but at a later date than the date of the order, are deemed to have taken place on the date of the order.

The exceptions to this rule:

• Any transfers which arise in the three years after permanent separation of the married couple are treated as no gain/no loss. 
• Any transfers between the married couple as part of their formal divorce agreement. There is no limit if this exception applies. 

These exceptions apply to disposals that occur on or after 6 April 2023. 

What assets do you pay capital gains tax on following a separation or divorce?

Following a separation or divorce, you pay CGT on the gain when you sell or dispose of chargeable assets, examples of which include:

• Personal possessions worth £6,000 or more each, apart from your car.
• Property that is not your main home.
• Your main home, if previously let, is used for business purposes or if the garden and grounds exceed 0.5 of a hectare (just over an acre or 5,000 square metres) and do not meet certain tests. 
• Shares not held in an ISA or PEP. 
• Business assets (subject to meeting required conditions).

If you sell or give away crypto assets (like cryptocurrency or bitcoin), you should check if you have to pay CGT. 

What assets are exempt from capital gains tax following a separation or divorce?

Following a separation or divorce, you do not pay CGT on gains you make from:

• Your car, including classic cars.
• Gifts to UK-registered charities.
• Personal belongings or chattels where the sale proceeds are less than £6,000 each.
• ISAs or PEPs. 
• UK government gilt-edged securities, for example, national saving certificates, premium bonds and loan stock issued by the Treasury.
• Betting, lottery or pools winnings.
• Personal injury compensation.
• Cash.
• Foreign currency held for your own use.

How to work out your capital gains tax following a separation or divorce

To calculate whether CGT is payable following a separation or divorce, you will need the following information:

• Acquisition cost. 
• Current market value or, if a sale has taken place, the sale price/net proceeds of sale.
• If additional funds have been used to buy, sell or improve the property, the following can be deducted: 
  • Fees or commission for professional advice or services, e.g. CGT valuation, solicitor and estate agent fees.
  • Improvement costs increase the value of the property, but not maintenance costs such as repairs or decorating.
  • Stamp duty and VAT.
• Capital losses on disposals in the same tax year and capital losses brought forward from previous tax years.

CGT on overseas assets or if you are abroad 

You may have to pay CGT if your asset is overseas, for example, a holiday home that is not listed as part of the financial settlement. If this applies, the impact of foreign currency movements on the disposal will need to be considered. In addition, there may be local taxation issues to consider. In the same way, as for any other chargeable asset, the acquisition cost and value on disposal of a property will be calculated by reference to Sterling at the relevant dates. This can give rise to seemingly paradoxical results, whereby the value of a property may have decreased in local currency terms but have increased in Sterling terms (or vice versa) as a result of movements in exchange rates.  

You have to pay tax on gains you make on property and land in the UK, even if you’re non-resident, for tax purposes. You do not pay CGT on other UK assets, for example, shares in UK companies, unless you return to the UK within five years of leaving.

Principal private residence relief 

Principal private residence relief (PPR) provides an exemption from CGT on an individual’s main residence (including grounds of up to half a hectare). An individual can only have one PPR at a time.  

No relief is available for any proportion of the property that is used exclusively for business purposes, including a letting business. For example, if a garage has been converted into a therapy room, no PPR relief will be given on the proportion of the gain relating to the garage. The split is usually calculated based on area, but any just and reasonable method of apportionment can be used. HMRC accepts that the position is different if the tenant is a lodger sharing communal spaces with the owner.

Lettings relief may be claimed if owners have occupied the property at the same time as their tenants, provided they were not carrying on a trade or business. 

Principal private residence relief during marriage 

Only one property can be your main residence and, therefore, qualify for principal private residence relief. If an individual or couple own more than one property that can be occupied as a residence, they may elect which of their properties will be considered their main residence and qualify for the relief. Such an election must be made within two years of acquiring the additional property. A home is only eligible for PPR relief for a tax year in which the individual disposing of the property is either:

• Resident in the same territory as the property; or
• Non-resident, but the individual (or his or her spouse) spent at least 90 nights in that property (or all their properties in that territory).

Principal private residence relief after separation

When a married couple permanently separate, the no gain/no loss rules still apply in the 3 years following permanent separation. 

After the tax year of permanent separation, spouses are each entitled to relief on their own PPR. If either has more than one residence, they are separately entitled to nominate which property should be considered their main residence for the purposes of PPR relief.

A special extension to PPR may apply where the spouse who moves out of the matrimonial home transfers their interest in that home to the other spouse under a court order or other agreement made in contemplation of a permanent separation.  

In this situation, provided the transferee has continued to occupy the property as their residence throughout the period since the transferor left the property, PPR relief will be extended from the date the transferor moved out of the property up to the date of the transfer. There is no maximum time that can be covered by this relief. However, the transferor will not be able to claim PPR on any other property during the extended relief period.  

This additional relief will not apply if the property is being sold to a third party. 

If the transferring spouse has left the matrimonial home for a period that exceeds nine months, the property will not have been his or her PPR for the full period, so any resulting gain may not fully qualify for PPR relief. 

When is capital gains tax payable following a separation or divorce?

A 60-day reporting and payment period is required on residential property. A standalone return will be required to be submitted to HMRC within 60 days of completion, along with a payment on account of CGT based on an estimated calculation of the gain. Capital losses and available reliefs can be factored in. The reporting period is reduced to 30 days if you are a non-UK resident at the time of sale. 

Using a family-owned company to fund a divorce settlement 

It is essential to seek advice if you are intending to dispose of shares or assets in a private limited company. There are a number of ways the business can fund a settlement, and it is essential that you get advice on the best way of extracting the funds and the reliefs and exemptions available.  

Business Asset Disposal Relief (formerly Entrepreneurs Relief) is available to individuals who are disposing of shares or assets in a private limited trading company. The individual must own at least 5% of the overall share capital and have held the shares for at least 24 months prior to the disposal. 

Inheritance tax implications on separation and divorce

Inheritance tax during marriage

Transfers between spouses are exempt from IHT (though there are restrictions if the donee is not domiciled in the UK and has not elected to be UK domiciled for UK IHT). This exemption continues to apply until the date of the final divorce order.

Inheritance tax after the final divorce order 

Transfers after the final order of divorce are considered potentially exempt transfers (PETs), unless specific exemptions apply. These PETs will come within the scope of IHT if the donor dies within seven years of making the gift.

Income tax implications of separation and divorce

When considering a potential settlement, it is important to consider whether a party’s income tax position will change as a result of the transfer of an income-bearing asset, such as shares or rental properties. 

Consideration should also be given to any child benefit payments (tapered if income exceeds £50,000), whether you are married or unmarried, and annual allowances for pension contributions. 

During marriage

Marriage Allowance relief may be available. This relief allows you to transfer up to 10% of the value of the full personal allowance to your spouse. If the lower earner is a non-tax payer and the higher earner is a basic-rate taxpayer.

After separation

Married Couple’s Allowance is only available if the couple are living together. It will be available in the tax year of permanent separation.

Marriage Allowance is available until a couple divorce, with the date of cessation dependent on who cancels the allowance transfer.

Individuals are treated as no longer married for income tax purposes from the date of permanent separation. 

Pension freedoms and lifetime allowance on separation and divorce

Since 2015, pension freedoms have enabled people to access their pension funds subject to tax from age 55. This increased freedom also applies to recipients of pension-sharing orders. 

Occupational and personal pension rules were overhauled in 2006, with pension funding being controlled by two primary restrictions: how much can be contributed or accrued annually (Annual Allowance) and how much can be accumulated over a lifetime (Lifetime Allowance).

The Money Purchase Annual Allowance (MPAA) prevents people from cashing in their pension and reinvesting in a pension to gain tax advantages. The MPAA is triggered by taking any income under a flexi-access drawdown, taking an uncrystallised funds pension lump sum, or taking income from capped drawdown in excess of the cap and triggering flexi-access drawdown. 

The Lifetime Allowance (LTA) was designed to restrict the amount an individual could accumulate in registered pension schemes over their lifetime before LTA tax charges are imposed. LTA charges apply where an individual’s pension benefits are crystallised (taken) in excess of the LTA, with the LTA test being applied only at the point of crystallisation. There are a number of different crystallisation events where the LTA test is applied. 

The value of pension benefits in a UK-registered pension scheme for testing against the LTA is not necessarily the same as the cash equivalent value. 

You can check the current allowance rates by using the following link: Pension scheme rates.

From 6 April 2024, the LTA will be abolished, as announced during the Spring Budget 2023.

Stamp duty land tax (SDLT) on separation and divorce 

The transfer of property (eg all or part of the family home) is exempt from SDLT and higher rate for additional dwellings if it is effected in pursuance of a court order, or an agreement between the parties in connection with divorce, dissolution, nullity or judicial separation/civil partnership separation order in relation to SDLT but not the additional dwellings rate.

Otherwise, SDLT and the additional dwellings rate will be charged based on the consideration given for the transfer, including:

• any cash payment;
• any assumption of a liability to pay a mortgage: the liability assumed is taken to be a proportion of the outstanding mortgage corresponding to the proportion of the share of the property that is acquired.

The additional dwellings rate will not be charged where there is a property exchange between spouses/civil partners or where a co-owner adds to an existing interest in their main residence.

Tax implications of separation and divorce- conclusion

Tax implications of separation and divorce can be complex and costly if you do not seek professional advice. The team at Watson Morris Family Law can help you navigate the tax implications that may arise on your separation or divorce. This insight is for general guidance only and should not regarded as legal or financial advice. 

Please contact us for an initial, free, no-obligation discussion to see how we can help. 

For conduct in divorce proceedings to be relevant in an application for a financial order it must be of a nature that it would be ‘inequitable to disregard’ (section 25(2)(g), Matrimonial Causes Act 1973).

Conduct will only be relevant in exceptional circumstances.  A party who pursues inappropriate conduct arguments may find a cost order is made against them.

Court procedure for conduct in divorce proceedings

In this insight we explain the court procedure if one party in a divorce raises conduct within their financial remedy proceedings.  For an overview of what amounts to conduct in divorce proceedings see our insight

Financial statement for a financial order under the Matrimonial Causes Act 1973 (MCA 1973)/ Civil Partnership Act 2004

The first stage in an application for a financial order is for the parties to file their financial disclosure using the Financial Statement Form E.  At paragraph 4.4 of Form E it states ‘Bad behaviour or conduct by the other party will only be taken into account in very exceptional circumstances when deciding how assets should be shared after divorce/dissolution.  If you feel it should be taken into account in your case, identify the nature of the behaviour or conduct’.

Whilst the form makes it clear that conduct will only be taken into account in very exceptional circumstances it can be tempting for parties to go into detail about the other’s bad behaviour.   In WC v HC (Financial Remedies Agreements) [2022] EWFC 22, [2022] 2 FLR 1110 at para [1(i)] Mr Justice Peel said that ‘Parties, and their legal advisers, may be under the impression that to describe the other party in pejorative terms, and seek to paint an unfavourable picture, will assist their case. It is high time that parties and their lawyers disabuse themselves of this erroneous notion’.

If your spouse has made allegations about your behaviour take early legal advice to understand whether conduct is likely to be relevant. If not relevant invite your spouse to agree to a recital confirming they will not pursue conduct in divorce proceedings.

Court directions and filing of statements if your spouse raises conduct in divorce proceedings

If your spouse continues to seek to run a conduct case, the court will need to make directions for your spouse to file a concise statement addressing:

1. What conduct exactly he/she is seeking to rely upon;
2. the basis for his/her conduct allegations; and
3. what effect the alleged conduct should have on the financial remedy application.

The court will also give you permission to file a statement in answer, if so advised.

Cost rules

In financial remedy proceedings there is a ‘no order as to costs rule’ (FPR 28.3(5)), which means the court will not make a cost order unless appropriate to do so taking account of the conduct of one of the parties (whether before or during the proceedings). The court may make a cost order against a party if it considers it unreasonable for a party to raise, pursue or contest a particular allegation or issue.

Pleading conduct in divorce proceedings- conclusion

It will only be in exceptional cases that conduct in divorce proceedings is relevant.  Tempting as it may be to list allegations of behaviour or conduct seek early legal advice on whether the behaviour will be relevant.  Significant costs can be incurred in pleading conduct that is not relevant and may result in cost orders being made.  

The team at Watson Morris Family Law can help you navigate the law on conduct in divorce proceedings. For an initial free no obligation discussion to see how we can help please contact us.

‘No-fault divorce’ means couples no longer need to support the irretrievable breakdown of their marriage with a supporting fact and ‘blame’ the other.  Whilst the reason for the marriage breakdown is not usually relevant,  conduct in financial remedy proceedings may be taken into account if in the opinion of the court it would be inequitable to disregard it (section 25(2)(g), Matrimonial Causes Act 1973).

Conduct in financial remedy proceedings

In this insight we explain what amounts to conduct in financial remedy proceedings. For an overview of the court procedure if a spouse raises conduct in divorce proceedings see our insight

What is conduct?

In OG v AG [2020] EWFC 52, Mostyn J observed ‘Times have changed. The financial remedy court is no longer a court of morals.  Conduct should be taken into account not only where is it inequitable to disregard but only where its impact is financially measurable.  It is unprincipled for the court to stick a finger in the air and arbitrarily to fine a party for what it regards as immoral conduct’.

Mostyn also observed that there are four types of conduct:

• Gross and obvious personal misconduct requiring a financial consequence if it is to be reflected in the award.
• Wanton and reckless dissipation of assets leading to add-back.
• Litigation misconduct leading to a costs order.
• Non-disclosure leading to inferences being drawn about the extent of the assets.

Personal conduct

The following are examples of personal conduct it would ‘in the opinion of the court be inequitable to disregard’.

In Jones v Jones [1975] 2 ALL ER 12 the husband had attacked the wife with the result that she was virtually unemployable.

In Neil v Neil [2019] EWHC 3330 (Fam), [2020] 1 FLR 1095 the husband was entitled to have part of a consent order, which provided for maintenance payments of £5,500 to be paid to the wife, set aside, in the circumstances where the order had been obtained through fraud and/or dishonesty on the part of the wife.

In FRB v DCA [2020] EWHC 754 (Fam), Cohen J found that the wife’s conduct in allowing the husband to believe that he was her child’s biological father, so inducing him to commit to the child emotionally and financially, did amount to conduct that was inequitable to disregard. However, he did not reduce the wife’s sharing award, as the husband had provided seriously deficient disclosure. He effectively offset the wife’s non-financial conduct against the husband’s litigation misconduct.

Domestic Abuse Act 2021

The role of the Domestic Abuse Act 2021 (DDA 2021) in proceedings for financial orders is developing.

In DP v EP [2023] EWFC 6, the Family Court made findings against the wife of economic abuse (section 1(4), DAA 2021) and conduct that it was inequitable to disregard. During their long marriage, the wife had bought and sold assets, deliberately concealing her actions from the husband who was illiterate and trusted her to manage his assets. Where the wife’s conduct had financially measurable consequences, the requisite amount was added back to the wife’s assets and a fair outcome was represented by a percentage split of 53:47 in the husband’s favour.

Add-back or re-attribution of assets

If one party has or continues to recklessly or irresponsibly waste or dissipate assets the court can use its discretion to ‘add- back’ or notionally attribute such wasted assets to the party responsible for the dissipation of the assets when considering the overall position of the parties. However, as highlighted by Mostyn J in BJ v MJ (Financial Order: Overseas Trust) [2011] EWHC 2709 (Fam) (at para [51]), ‘…the problem with this technique is that it does not re-create any actual money. It is in truth a process of penalisation. In my judgment it should be applied very cautiously indeed and only where the dissipation is demonstrably wanton’.

In ABX v SBK (DX intervening) [2018] EWFC 81 Francis J highlighted that in considering add back issues, each case will be very fact specific, adding that ‘ I venture to suggest that there were very few cases indeed which do not fall into ‘big money’ category where arguments over add back are likely to be worthwhile’.

To succeed on an add back the expenditure must be ‘wanton’ or ‘reckless’. In MAP v MFP [2015] EWHC 627 (Fam), [2016] 1 FLR 70 Moor J considered that although the husband had overspent, he had not done so to deliberately reduce the wife’s claim, and declined an add-back on the basis that:

• the court could not add-back items of expenditure that were simply extravagant or part of the husband’s obsession with perfection;

• a spouse had to take their partner as they found them; many very successful people are flawed, that was true of the husband and it would be wrong to allow the wife to take advantage of the husband’s great abilities that enabled him to make such as success of the company while not taking the financial hit from his personality flaw that led to his cocaine addiction and his inability to rid himself of the habit, and

• the husband’s behaviour might have been morally culpable overall, and it was irresponsible, but it was not deliberate or wanton dissipation and therefore would be wrong to add the assets back.

Non-disclosure and litigation misconduct

Relevant conduct may include making false statements or wilful non-disclosure during proceedings. Litigation conduct if proved, will usually be penalised in costs rather than in the distribution of the assets. In P v P (Financial Relief: Non-disclosure) [1994] 2 FLR 381, Thorpe J found conduct that in his opinion it would be inequitable to disregard, but considered that it should be reflected in an order for costs rather than in the distribution of assets.

There are however cases where litigation conduct has been considered, rather than being reflected in a costs order. In Morgan v Morgan [2006] EWHC 2250 (Fam) the husband had gambled away a significant sum, as well as repeatedly failing to make proper disclosure, and the judge considered this conduct relevant to the award, rather than merely confining it to a costs penalty.

In OG v AG Mostyn J said that ‘…it is very difficult to conceive of any circumstances where litigation conduct should effect the substantive disposition’.  In TT v CDS [2020] EWCA Civ 1215, [2021] 1 FLR 996 litigation conduct was considered by the Court of Appeal and Moylan LJ said that ‘what is important is that, whether by taking the effect of the conduct into account when determining the distribution of the parties’ financial resources (both income and capital) and/or by making an order for costs, the outcome which is achieved is a fair outcome which properly reflects all the relevant circumstances and gives first consideration to the welfare of any minor children’.

Conduct in financial remedy proceedings- conclusion

Although conduct in financial remedy proceedings is a specific factor the court can consider it will only be in exceptional cases that conduct is relevant. Add-back will be applied very cautiously and only if the dissipation is demonstrably reckless or wanton.  In litigation misconduct cases the court will consider all the circumstances of the case when deciding whether it would be fair to make a cost order or redistribute the assets between the parties. The team at Watson Morris Family Law can help you navigate the law on conduct in financial remedy proceedings. For an initial free no obligation discussion to see how we can help please contact us.

If your property is no longer affordable and you are at risk of repossession or bankruptcy you may be able to apply to the court for an interim order for sale to force the sale of your house during your divorce.

In this insight we explain the position for divorcing couples without an existing financial order in place.  If you already have a financial order in place and your ex-spouse is not co-operating with the order you will need to return your case to court for directions and/or issue enforcement proceedings.  For more information read our insight How can I enforce a sale or transfer of property in a divorce order? (watsonmorrisfamilylaw.co.uk).

There are several ways you can apply to the court for an order to force the sale of your house in a divorce:

Application under section 14 of the Trust of Land and Appointment of Trustees Act 1996 (TLATA 1996)

Section 14 of TLATA 1996 allows for the sale of any matrimonial property in which both parties have a legal or beneficial interest. The court has discretion to make any order that it thinks fit, including an order excluding occupation.  When exercising its discretion the court has to take into account a number of factors, including the purposes for which the property is held and the circumstances and wishes of the individuals entitled to occupy the property (section 15, TLATA 1996).

In Miller-Smith v Miller-Smith [2009] EWCA Civ 1297, the Court of Appeal held that the husband was entitled to pursue an order for sale of the former matrimonial home under section 14 of TLATA 1996, where the wife was defending the husband’s application for divorce and he was having to service a mortgage debt of £7 million on the property that he could not afford. The Court of Appeal reasoned that:

• When the court considers whether to exercise its discretion, it should first ask itself whether the issue can reasonably be left to be resolved within the financial remedy proceedings.

• The court should also consider whether the parties can apply for financial orders within a period of time that is tolerable in all the circumstances.

• If there appears to the court to be any measurable chance that the party opposing the order for sale   will, on an application within that period of time, be able to preserve their occupation of the home (by outright transfer or variation of the trust of land), it is unlikely that an order for sale would reflect a proper exercise of the court’s discretion.

• The court is not required to satisfy itself that it would also be appropriate to make an occupation order against the party opposing the sale under section 33(3)(e) of the Family Law Act 1996, and consider the circumstances specified in section 33(6) of the Family Law Act 1996.  

Applying the above principles to the facts in Miller-Smith the Court of Appeal decided that:

• The husband’s application crossed the threshold stage. He had issued his application for divorce more than a year before his order for sale application was heard. The wife’s defence of the application for divorce had delayed proceedings and the application for financial orders was unlikely to be determined within a further year. If the property was not sold, the husband would be required to continue funding the outgoings. It would not have been possible to resolve the issue in the proceedings for financial orders within a period of time that was tolerable in all the circumstances.

• There was no measurable chance of the wife preserving her occupation of the property. Apart from earnings, the husband had no substantial resources other than his interest in the property. She was therefore unlikely to succeed in any application for an outright transfer of the property   to her or for the property to be held under a trust of land.

Application under section 17 of the Married Women’s Property Act 1882 (MWPA 1882)

Under section 17 the court has the power to make such order as it thinks fit in any question between a husband and wife about the title to or possession of property. This enables the court to declare and enforce the parties’ proprietary rights according to trust and common law principles and includes the power to make an order for sale.  Section 17 does not however give the court the power to adjust the parties’ proprietary rights.  

An application to force the sale of a house in divorce under section 17 may be useful where one party may become bankrupt because a declaration as to each party’s beneficial interest in the property may assist against any subsequent claim by the trustee in bankruptcy. It can also be used if parties are unable to obtain a divorce or judicial separation or where a party wishing to apply for a financial order has remarried.

Application under Part 20 of The Family Procedure Rules 2010 (FPR 20)

FPR 20.2(1)(c)(v) states that the court may grant an order for the sale of relevant property which is of a perishable nature or which for any other good reason it is desirable to sell quickly. Relevant property is defined as property (including land) which is the subject of an application or as to which any question may arise on an application.

Ordering vacant possession and difference of judicial opinion on FPR 20

In BR v VT [2015] EWHC 2727 Mostyn J controversially challenged the view of Ward LJ in Wicks v Wicks [1998] 1 FLR 470 that there is no power to order vacant possession when the court orders a sale of property under section 17 MWPA 1882.  He interpreted FPR 20.2((1)(c)(v) as providing a separate procedural route to obtain an interim order for sale in proceedings for financial orders. He considered the procedural powers under section 14 of TLATA 1996 and section 17 of MWPA 1882 to be identical and concluded that, whether an application is made under either provision or FPR 20, if one spouse is seeking an interim order for sale of the matrimonial home occupied by the other spouse who has home rights, the court cannot order vacant possession without first being satisfied that the occupying spouse’s home rights should be terminated under section 33(3)(e) of the Family Law Act 1996 (FLA 1996), applying the evaluative factors in section 33(6).  

The evaluative factors in section 33(6) FLA 1996 are:

1. the housing needs and housing resources of each of the parties and of any relevant child;
2. the financial resources of each of the parties;
3. the likely effect of any order, or of any decision by the court not to exercise its powers on the health, safety or wellbeing of the parties and of any relevant child; and
4. the conduct of the parties in relation to each other and otherwise.

In BR v VT Mostyn J ordered:

• Termination of the wife’s right of occupation (section 33(3)(e), FLA 1996) and supplementary removal of her notice of home rights (paragraph 4, Schedule 4, FLA 1996).
• Sale of the former matrimonial home (FPR 20.2(1)(c)(v)).

In WS v HS (appeal-sale of matrimonial home) [2018] EWFC 11 Cobb J gave guidance on when, and in what circumstances a court can make an interim order for sale of a former matrimonial home. He confirmed that an interim property adjustment order   cannot be made under Matrimonial Causes Act 1973. An order for sale can only be made on or after a financial remedy order, so an application under FPR 20 would deliver a prohibited result. The FPR regulate court practice and procedure but cannot extend the court’s jurisdiction.

FPR 20 does not provide the power to order vacant possession, and this is why in BR v VT the wife’s home rights were terminated under section 33(3)(e) of the FLA 1996. Cobb J found that the court can order vacant possession under MWPA 1882 and under TLATA 1996 (relying on Miller-Smith).

Cobb J set out a two-stage test under FPR 20.2(1)(c)(v):

• Threshold stage: is the property perishable or is there another good reason for a sale?
• Discretionary stage: how should the court exercise its discretion?

Whether there is a good reason for the sale should be decided on the facts of each case. The court should consider all the relevant circumstances and any statutory factors. If necessary, termination of a spouse’s home rights under section 33(3)(e) of the FLA should be considered at the discretionary stage.

In a footnote to his judgment in SR v HR [2018] EWHC 606 (Fam), Mostyn J noted the difference of opinion between him and Cobb J. He reiterated his view that an interim order for sale can be made under FPR r.20.2(1)(c)(v) but directed that until the question is resolved by a higher court, such applications should be made under MWPA 1882.

In RA v KS [2023] EWFC 102, the wife applied for an interim order for the sale of a property that she co-owned with the husband and occupied it (section 17, MWPA 1882). Recorder Allen KC noted Cobb J’s approach (WS v HS) that the court has the power to order vacant possession under MWPA 1882 and TLATA 1996, but the power does not preclude the need to consider section 33(3) of the FLA 1996. He concluded that the court did not have jurisdiction to extinguish the husband’s right of occupation and order vacant possession, because the husband had a legal and beneficial interest in the property. This meant section 33(3)(d) of FLA 1996 applied (rather than section 33(3)(e)). The court could prohibit, suspend or restrict his right to occupy the property, but not permanently extinguish his right and order vacant possession.

If however the respondent’s right to occupy arises solely from home rights, then their right to occupy can be extinguished (section 33(3)(e), FLA 1996).

Can I force the sale of my property in a divorce – conclusion  

To sum up – the court can force a sale of a property before the conclusion of financial remedy proceedings.  An applicant will need to carefully consider whether to apply under section 14 TLATA 1996 or section 17 MWPA 1882 and must specify in their application their case regarding the respondent’s right of occupation. The team at Watson Morris Family Law can help you navigate the law on interim orders for sale. For an initial free no obligation discussion to see how we can help please contact us.

There is no guarantee that a personal injury award will be ring-fenced on divorce or be free from a claim from a cohabitant.  A nuptial or cohabitation agreement can however be used to safeguard your award and provide certainty on your finances during a relationship breakdown.  

Protect finances with a pre and post-nuptial agreement

A pre-nuptial agreement (also commonly referred to as a ‘pre-nup’) will map out how your finances will be divided in the event of a separation. A post-nuptial agreement is the same as a pre-nuptial agreement, the only difference being it is entered into after marriage. Either of these can be used to help vulnerable individuals protect their finances. These can be used if there has been a change of circumstance after marriage, such as the payment of a personal injury award. They can also be used if there hasn’t been enough time before the marriage to complete a pre-nuptial agreement.

A nuptial agreement cannot stop a financial claim being made to the court on marriage breakdown, however, if a claim is made the nuptial agreement will be a relevant circumstance. Provided the three-stage test in the case of Radmacher v Granatino have been complied with the agreement will be given decisive weight and parties should expect the court to hold them to the terms of the agreement.

In Radmacher v Granatino [2010 UKSC 42] the Supreme Court enforced a pre-nuptial agreement and confirmed that ‘the court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement’. 

Protect your finances with a cohabitation agreement

A cohabitation agreement (also known as cohabitation contract, cohabitation deed or living together agreement) will clearly declare the legal and beneficial interests in a property and avoid potential claims and costly litigation. This will help vulnerable individuals protect their finances when starting to cohabit. The agreement can also record whether there is to be a sale or transfer of the property in the event of a separation and allow you to map out how this will happen. It can also be used to record the financial and practical arrangements you want to make during your relationship.

There are no set rules on when a cohabitation agreement should be executed.  If property is being purchased with the intention of it being occupied as the family home, it is advisable for the agreement to be completed at the same time as completion of the purchase.  This will ensure that your intentions are clear and have been recorded at the outset.

If you are moving in together after purchase of a property you can enter into a cohabitation agreement at any time. It is not critical for the execution of the agreement to coincide with the commencement of your cohabitation.  It is more important to ensure that there has been time to reflect on the terms of the agreement and neither of you feel under any pressure to sign it.

Cohabitation agreements are not just for those in a cohabiting relationship.  Anyone pooling their resources to provide a home, or an investment should consider having one.  

Watson Morris protecting finances of vulnerable individuals during marriage or cohabitation.

The team at Watson Morris Family Law can help you navigate the law on nuptial and cohabitation agreements. For an initial free no obligation discussion to see how we can help please contact us. 

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